Global Diversification, Industrial Diversification, and Firm Value
Open accessAbstract
Using a sample of 44,288 firm‐ears between 1984 and 1997, we document an increase in the extent of global diversification over time. This trend does not reflect a substitution of global for industrial diversification. We also find that global diversification results in average valuation discounts of approximately the same magnitude as those for industrial diversification. Analysis of the changes in excess value associated with changes in diversification reveals that increases in global diversification reduce excess value, while reductions in global diversification increase excess value. These findings support the view that the costs of global diversification outweigh the benefits.
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At the time of Denis et al. (2002), Compustat was the only database providing information on MNEs' worldwide sales.
“At that time, Compustat was the only database to provide information on MNEs' worldwide sales.”
From The future of international business research on corporate globalization that never was… (2018) · cites this paper as Denis et al., 2002
Compustat provides some information on companies' geographical diversification, but with much less detail than for industrial segments.
“Compustat provides some information on companies' geographical diversification, but with much less detail than for industrial segments.”
From The future of international business research on corporate globalization that never was… (2018) · cites this paper as Denis et al., 2002
Compustat limits geographic segment reporting to one domestic segment (US sales) and a maximum of three additional segments.
“Compustat imposes limits on the number of segments -one for domestic sales (which means sales in the United States, because geographic information in the database is for US-based companies only), and a maximum of three extra segments.”
From The future of international business research on corporate globalization that never was… (2018) · cites this paper as Denis et al., 2002
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- Authors
- Denis, D. J., Denis, D. K., & Yost, K.
- Affiliations
- Purdue University West Lafayette (US)
- ORCID
- Yost, Keven
- Venue
- The Journal of Finance
- Publisher
- Wiley
- Published
- 2002-10
- Volume
- 57
- Issue
- 5
- Pages
- 1951-1979
- ISSN
- 0022-1082 (ISSN-L)
- 1540-6261
- OpenAlex
- W2158454654
- Cited by
- 1,049
- References
- 43
- Citations by year
- 2026: 32 · 2025: 37 · 2024: 38 · 2023: 43 · 2022: 35 · 2021: 54 · 2020: 55 · 2019: 41 · 2018: 60 · 2017: 46 · 2016: 62 · 2015: 55 · 2014: 62 · 2013: 52 · 2012: 61
- FWCI
- 82.69
- Type
- journal article
- Language
- en
- Open access
- bronze
- doi.org
- Locations
- The Journal of Finance (publishedVersion)
- SSRN Electronic Journal (acceptedVersion)
- Purdue e-Pubs (Purdue University System) (submittedVersion)
- Funders
- Purdue University
- Topics
- Social Sciences › Business, Management and Accounting › Accounting › Corporate Finance and Governance
- Social Sciences › Business, Management and Accounting › Strategy and Management › International Business and FDI
- Social Sciences › Business, Management and Accounting › Strategy and Management › Financial Reporting and Valuation Research
- Keywords
- international diversification, industrial diversification, firm value, valuation discounts, excess value
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